How Thumbtack Built a Huge Local Services Marketplace

How Thumbtack Built a Huge Local Services Marketplace

How do you build an online marketplace from scratch?

Thumbtack, an online marketplace for local services, yesterday announced a $100M funding round led by Google Ventures.

Building a local services marketplace is a notoriously difficult problem that has beaten many entrepreneurs. So how did Thumbtack get where they are? What tactics are behind their apparent success?

The founder of Thumbtack, Marco Zappacosta, was interviewed by Andrew Warner of earlier in the year and covered some of the tactics that Thumbtack used to build its marketplace. You can read the transcript of their interview here.

Here’s a summary of the tactics and approaches Marco described:

1. Built Supply Side Using Scraping and Customised Mass Emails

  • Recognising the chicken-and-egg problem of all marketplaces, Thumbtack saw the supply side as easier to get in place and focused on that first.
  • They used web scraping to compile data on local service providers and developed software to process and organise it.
  • They used the extracted information to bulk send customised emails to service providers inviting them to create profiles on the site.
  • They were concerned about being blocked by email service providers so were careful about monitoring the relevance of their emails.*
  • Their technology wasn’t limited to a specific category or part of the country, so they covered a broad range of categories and the whole US from the start.**
  • With their first $6M of funding, they had listed hundreds of thousands of service pros.

Here‘s an example of an email Thumbtack reportedly sent in 2012. What do you think: was this spam?

** It’s interesting to see that Thumbtack succeeded despite going against the common wisdom of focusing on a single city and/or category.

2. Built Demand Side Using SEO (Based on Unique Content of Service Provider Profiles)

  • Service providers creating their own profiles resulted in lots of unique content.
  • As the service provider profiles were crawled by search engines, this resulted in lots of organic search traffic.
  • More and more customers now coming from word-of-mouth and direct.
  • Have started running search and display ads, including retargeting.

3. Tried Different Revenue Models (Commission -> Subscription -> Per-Quote)

  • Initially, tried commission-based model. But had collection issues (hard to tell if an introduction resulted in paid work, lots of providers didn’t pay).
  • Next, tried subscription model. Worked okay, but wasn’t well aligned with marginal value of each introduction.
  • Currently charging providers to respond to quotes. (They can pay per response or buy credits in bulk.)

4. Off-shored Labour-Intensive Tasks

  • 75 of 200 employees are in the Philippines.
  • Main tasks for these employees are: responding to support inquiries (from customers and providers) and helping to onboard service providers.

In summary, then, in terms of building up their marketplace, Thumbtack’s use of mass emails to contacts scraped from the web seems to have been key. Another important decision was to keep their supplier profiles accessible to search engines. This allowed them to grow their demand side through SEO.

At Thumbtack’s current scale and with a large amount of money to spend, it will be interesting to see whether other paid acquisition channels will now start to pay off for them.

What other tactics have you seen used to successfully establish marketplaces? Do leave a comment below.

If you’re interested in tactics for building marketplaces, you make like to read my posts on Getting to Critical Mass: How to Start a Marketplace Business and Skillshare: How to Build a Marketplace for Online Education.

Photo by kellee_g

Skillshare: How to Build a Marketplace for Online Education

I always like hearing how entrepreneurs have managed to launch marketplace businesses. TechCrunch recently posted this interview with Michael Karnjanaprakorn of Skillshare, a platform for online education, about how they seeded and grew their marketplace.

He described two main phases in a marketplace’s journey:

Phase 1: Seeding

Where you “Roll up your sleeves up and get it done.”

Michael explains how, at Skillshare, they focused on getting teachers onto the platform as they recognised that teachers already had their own student communities who they’d be able to bring along with them. They reached out to their friends and personal contacts and tried to minimise the friction for teachers to get started, including doing non-scalable things like finding them real-world venues for the classes.

The key points from Michael are:

  • Don’t try to do everything. If you can focus on one side of the marketplace and get them to bring in the other side, then do that.
  • Reduce friction and get to liquidity as soon as you possibly can because once you do, powerful network effects then come into play.
  • At this stage, don’t worry if what you’re doing doesn’t scale.

Phase 2: Scaling

The labour-intensive approaches used in the seeding phase tend not to scale, so you then need to transition to building things into the platform to power further growth. Skillshare are currently improving their product to deliver more value to their users and help users create content and resources that, in turn, bring in more users.

Further Reading

Photo by: Emilian Robert Vicol

Perceived Value vs. True Value: Is There a Difference?

This is a great TED talk: Rory Sutherland makes an entertaining case for thinking more about psychology in the way we design and enhance things (and less about technology).

One example: one of the best improvements to the London Underground in ROI terms did nothing to change the trains or how they ran. Instead, it was to install displays on platforms to show passengers when the next trains were expected.

If you have a few minutes spare, it’s worth a watch.


How to do Video SEO

The latest Grovo ‘Expert Series’ video is an interesting one. Tom Critchlow is an SEO expert and talks through what you need to know about video SEO. (And he’s a Brit, too, which makes a nice change!)

Here’s the video series.

There are 13 snippets to go through, so it takes a while to watch. If you don’t have time, here are my notes:


  • Video is becoming increasingly important.
  • Now’s a good time to get into it.

Choosing Subject Matter

  • Think about who your audience is and what they’ll be interested in. Talk about something you know a lot about.
  • On YouTube, people are typically searching for information – researching and asking questions rather than looking to buy something.
  • Look on Quora or Yahoo Answers for an idea of what things people might be searching for and what terminology they’re using.

How to Create Your Videos

  • Just dive in. Don’t worry about optimisation to start with.
  • Include a call to action; tell people what you want them to do.
  • For B2B marketing, you may want to put the video behind an email opt-in.

YouTube or Self-Hosting

  • If just dabbling, host on YouTube. If looking to invest seriously, use something like Wistia, Vimeo or Vzaar (more features and better analytics).

YouTube Basics

  • Have a good title and description. Use YouTube Keyword Tool to find out what people are searching for.
  • Make it public.
  • Allow comments.
  • Make sure you have an umbrella account that the videos are posted under.
  • Try to build up a group of followers. Ask people you know to Like and comment on your videos.
  • Make sure the description encourages people to watch the video.
  • If you want to drive people back to your site, include your full URL in the description.

Advanced YouTube Tips

  • Upload captions (use CaptionTube) — helps video indexing and discovery.
  • Use your target keywords in the filename you upload.
  • Make sure you get people to watch the video all the way through.
  • Engage in the YouTube community.
  • Use YouTube annotations for call to actions, but don’t make it too spammy / intrusive — try to provide value for the user.

Self-Hosting Basics

  • Tom recommends Wistia.
  • If self-hosting, you should create a video sitemap.
  • Wistia does this for you automatically (their killer feature).
  • There are no great tools for doing this, apart from Yoast’s video SEO tool (WordPress-only).

Advanced Self-Hosting

  • Use schema to mark up your video (VideoObject).
  • If you’re getting really serious about video, consider doing transcriptions of your videos. Post transcription along with each video.

Getting Distribution

  • 100,000 views is achievable.
  • It’s often easier to get a blog to embed a video than to link to it elsewhere.
  • TubeMogul can be useful for getting maximum views.
  • Google is getting smart at spotting duplicate videos.
  • If you want SEO value of ranking for a particular phrase, self-host and don’t use TubeMogul.
  • If you’re pushing a viral video, paying for initial views can work well.
  • StumbleUpon advertising can be effective for viral/funny content (especially if video autoplays).

Video Linkbuilding

  • Have embed codes that link back to your site (you can tweak the YouTube embed codes).
  • Can work well to include the video in a press release (either embedded or linked-to).
  • People will often link to YouTube rather than your site. To counter this, have some related resource on your site and encourage people to link to it (even if they’re also linking to YouTube for the video). If people don’t link to your resource, follow up with them and ask them to do so. News organisations generally won’t update articles, but bloggers will.

Link Outreach

  • Carefully craft your content with a particular audience in mind.
  • Contact people in a friendly way to see if they’d be interested in your content.

Video Analytics

  • YouTube Analytics show you lots of good information, e.g. when people tended to stop watching.
  • SEOMoz’s Open Site Explorer is good for seeing your backlinks. You need to register for a free account to use it.
  • AuthorityLabs tool has icons that let you see if videos are ranking highly for a given keyword phrase. If they are, then the phrase may be a good one for you to target with a video (Google thinks videos are a good thing to show for that search phrase).

Case Studies

  • SEOMoz Whiteboard Friday
  • Zappos are pushing the envelope for video SEO in e-commerce by having 50,000 product videos like this one. Note that the videos are on the relevant product pages, so it’s perfect if someone clicks through to the page from a search result.